In IDC’s recent report, The Current State of Header Bidding and In-App Bidding¹, analysts Marissa Gluck and Karsten Weide examine how bidding is impacting publishers and what effect this is having on the wider industry.
The report affirms the benefits of bidding for publishers, including long-term efficiency, increased revenue and access to more demand. It also provides recommendations for publishers navigating the migration from waterfall mediation, to app bidding.
Innovating in a fast-moving industry
According to the report, header bidding has become table stakes with 80% of web publishers adopting this approach for their ad monetization. Previously, app bidding adoption lagged behind web header bidding adoption - largely due to the more complex app environment - but this is changing.
Gluck and Weide noted: “In-app bidding fell behind desktop due to the difficulty of implementation for several years. However, that is beginning to change. There have been technical developments that allow the mobile app industry to use models that are similar to header bidding, with some significant differences."
Mobile apps have traditionally been a fertile environment for innovation. Gluck and Weide recognized bidding as an advancement that supports this already highly-innovative industry, by providing greater operational efficiency.
A bidding model for mobile apps should maintain this kind of in-app innovation. In addition, some of the most popular mobile apps are developed by relatively small teams without the resources to run their own ad sales at scale. Programmatic advertising is critical to these developers who want to maximize their yield while focusing resources on engineering and development."
More revenue, demand and efficiency
Waterfall mediation is recognized as complex and inefficient. This model is based on average historical prices, which often results in publishers missing out on potential revenue. App bidding means every demand source has the opportunity to bid in an open, real-time auction. The result is increased competition for inventory, which helps drive better prices for each impression.
Further, bidding allows publishers to easily add more demand sources with minimal effect on latency and minimal impact on operational resources.
Operational efficiency is also a key benefit of bidding as publishers can minimize the valuable time their teams spend maintaining cumbersome waterfalls. This frees up resources to focus on more impactful areas of the business such as improving the app experience.
Recommendations for publishers
For publishers looking to successfully integrate app bidding, the report outlines several key recommendations to keep in mind.
Firstly, assess whether to develop an in-house mediation solution, or work with a third-party partner. If the latter is chosen, establishing a fair and transparent auction is important.
Secondly, ensure there is enough competition for inventory. We recommend a minimum of three networks, with a significant share of wallet, to create enough demand density.
As the industry migrates towards bidding, some publishers will look to adopt a hybrid model. Gluck and Weide summarized this progression:
"...even as the industry moves more and more toward programmatic advertising and auction models, most publishers are not going to abandon the waterfall model entirely. Most will find a hybrid solution. Optimally, both the waterfall and header bidding will compete simultaneously for an impression."
The report further recommends testing the right app and format prior to deploying app bidding, as well as using A/B testing to best isolate and measure the impact of bidding on revenue.
Entering a new era in ad monetization
The benefits of app bidding makes it an attractive approach for publishers who want to move past the waterfall and its inherent shortcomings. App bidding is helping the industry enter a new era in ad monetization; one that is set to enable a more fair and open ecosystem.
To learn more about app bidding with Meta Audience Network, please visit our bidding solutions page.
¹ IDC: April 2020 - - Doc # US46006920
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